Primary care trusts in England have been allocated a total of £148.3 billion for the next three years, representing a 30% average increase to meet growing cost pressures.

The new allocations represent the first ever to be directly controlled by PCTs, and the first ever for a three-year period, intended to allow for medium-term financial planning.

The Department of Health conceded this autumn that the previous one-year service and financial framework (SAFF) allocations had only allowed NHS bodies to deal with short-term goals.

Announcing the plans, Health Secretary Alan Milburn said the new system would allow PCTs to plan with confidence for the future, and that the money had been distributed according to a new fairer funding formula.

"Poverty and deprivation cause excess morbidity and mortality. They bring extra costs to local health services. The new formula reflects those costs by using better measures of deprivation and by taking greater account of unmet health needs.

"The new funding formula is fair to all parts of the country. It reflects extra needs and extra costs. It benefits PCTs in both North and South. The average PCT budget will grow over the next three years by almost £42 million. No PCT will receive an increase in funding over the next three years of less than 28%".

The increase is intended to cover the newly agreed 12.5% increase in basic pay for nurses and other health workers, as well as increases expected from the on-going GP contract negotiation. Uncertainty surrounding the financial element of the GP reforms is at least equaled by growing prescribing costs as one of primary care's biggest headaches.

Growth in prescribing costs is expected to reach 13% for 2002, significantly more than the average drugs budget increase of 10%, with many PCTs feeling overstretched by escalating NSF and NICE implementation costs in particular.

The increase in funding came just days after the release of newly updated performance ratings for all NHS trusts. These will eventually be linked to funding, and remain highly controversial among PCT executives.

The Government published the first ever PCT performance indicators this summer, provoking widespread anger from trust executives, many of whom had been established for just a matter of months. The NHS Alliance demanded an urgent meeting with the Commission for Health Improvement (CHI) after one in ten PCTs told it that they had found small but "significant inaccuracies" in their performance indicators.

The row has led CHI and the DoH to lengthen its consultation with PCTs, who are now invited to make further comments on a provisional list of performance indicators.

The 'focus areas' for the indicators are in:

improving health: health promotion, public health and reducing inequalities

service provision: directly provided services and organisational development

access to quality services: commissioned services and qualitative measures.

Prescribing of generics, drugs acting on benzodiazepine receptors, antibacterial drugs, atypical antipsychotics and anti-dementia drugs are included on the provisional list of key indicators.

Meanwhile, acute, specialist and ambulance trusts have now been given a set of updated indicators, joined for the first time by mental health trusts.

pharmafocus@pharmafile.co.uk